New York Attorney Malpractice Blog

Hinshaw reports this months old case about legal fee disgorgement.  We reported on it about a month ago.  Wilson Elser, a big defense firm which handles legal malpractice defense cases, unsuccessfully defended itself on this case.

"Ulico Casualty Company (“Ulico”) is an insurer that specializes in trustee and fiduciary liability insurance. In the early 1980s Ulico entered into managing general agency agreements with Professional Indemnity Agency, Inc. and Professional Intermediary Associates, Inc. (collectively “PIA”) for PIA to serve as its underwriting agent for this book of business. As part of this agreement, the Wilson, Elser, Moskowitz, Edelman & Dicker firm would serve as claims attorneys to handle claims for coverage made by Ulico insureds, as well as provide general claims handling and oversight. The retainer in effect at the time of this controversy provided that “Wilson, Elser shall devote all the time necessary to the business of the Company, but shall not by this retainer be prevented or barred from taking other employment of a similar or other legal character by reason of the employment herein specified.” Id. at 2.

Subsequently, PIA became concerned about Ulico’s declining Best rating and business practices. PIA decided to enter an agreement to place the business with Legion Insurance Company (“Legion”). PIA hoped to move 50 percent to 75 percent of the business from Ulico to Legion. Id. at 3. Wilson, Elser advised PIA that its managing general agency agreement with Ulico was not exclusive and drafted a managing general agency agreement for use by PIA and Legion. Wilson, Elser also prepared filings necessary to obtain regulatory approvals from the state insurance departments for Legion to provide the insurance. The filings included an endorsement to permit Legion to offer more favorable coverage than Ulico and enhance Legion’s competitive position. Id. at 4. Wilson, Elser also offered advice to PIA about strategy regarding the termination of its relationship with Ulico. The court noted it was “undisputed” that in four instances, Wilson, Elser engaged in dual representation of Legion and Ulico on claims by insureds for coverage when both companies had policies that could apply. Id. at 5.

After terminating its relationship with both PIA and Wilson, Elser, Ulico filed suit against Wilson, Elser claiming breach of fiduciary duty, aiding and abetting PIA’s breach of fiduciary duty, legal malpractice, tortious interference with contract and tortious interference with prospective economic advantage. Id. at 6. Ulico moved for summary judgment on the issue of breach of fiduciary duty and for an order that Wilson, Elser return legal fees it received during the period of alleged disloyalty. Id. at 1.

The court noted that “the conflict of interest on which the fiduciary duty claim is premised did not affect Wilson Elser’s representation of Ulico in any litigation, but consisted, rather, in advancing the business interests of certain clients, PIA and Legion, to the detriment of another client, Ulico.” Id. at 10. The court found this situation presented an “egregious” breach of fiduciary duty because the attorney “fostered the business interests and advanced the competitive position of certain clients not over a former client but over a client which the attorney still represented…The undisputed facts…demonstrate that Wilson Elser did not merely assist PIA with preliminary steps to set up a competing business, but rather assisted PIA at every stage of PIA’s plan to transfer Ulico’s TFL business from Ulico to Legion.” Id. at 12.

The fact that the parties had respective expert opinions on the issue of the breach did not create an issue of fact because the existence of the duty and its breach presented questions of law for the court. Id. at 14. The breach does not require the actual use of client confidences but only the “reasonable probability” that they will be disclosed. See Jamaica Public Serv. Co. Ltd. v. AIU Ins. Co., 92 N.Y. 2d 631 (1998). In light of the fact that Wilson, Elser had been Ulico’s claim counsel for more than 10 years, it held confidential information it had acquired from Ulico regarding insureds, premiums, rates, loss experience and profitability, which would have been very useful to Legion in competing with Ulico. Ulico at 15. The court easily rejected the argument that the retainer language about the ability to take other or similar employment allowed this conduct, as it fell far short of the complete disclosure required to obtain the client’s informed consent to this conflict of interest. Id. at 16.

Finally, the court turned to appropriate damages. The court rejected Wilson, Elser’s argument that the fees subject to forfeiture should be only those for services where there was a breach of fiduciary duty. When there is a persistent pattern of disloyalty, “the cases ordinarily order forfeiture without apportioning or limiting the forfeiture to fees for services performed with disloyalty.” Id. at 21. Because the monthly fee structure between Ulico and Wilson, Elser was “tantamount” to a salary and could not be broken down by individual tasks, the court held that the forfeiture of fees should cover all regular monthly fees paid during the period of disloyalty. Id. at 22. The court ordered further proceedings to determine whether, as Ulico contended, the amount to be disgorged equaled $3,420,612.05.

Significance of Case
As a general proposition, the representation of competing businesses vis a vis third parties is permissible without conflicts waivers. Here, as elsewhere, however, the devil is in the details. Where the matters being handled for the competing businesses are as related and the interests of the clients are as plainly adverse as this court found them to be, a critical line has been crossed. And even in the absence of actual harm to a client, one of the consequences of crossing such a line can be a forfeiture of fees "

Attorneys move from firm to firm more often now than in the past.  The NYLJ and Law.Com's top articles are all about firms reconstituting themselves, and movement of lawyers from hither to yon.

Here is a case from New Jersey about a successful legal malpractice case in which plaintiff recovers from one set of defendants, but has to take an assignment of insurance rights from the second set.  The insurance carrier started to defend under a reservation of rights, and then successfully withdrew.

"The governing legal principles are firmly established. An insurance company may respond to a claim against its insured by advising the insured that it is willing to defend under a reservation of rights or "non-waiver agreement." Merchants Indem. Corp. of N.Y. v. Eggleston, 37 N.J. 114, 126 (1962); Griggs v. Bertram, 88 N.J. 347, 357 (1982). Under such an agreement, the insurance company cannot be held ultimately responsible for payments otherwise required by the insurance policy. The agreement may be "inferred from the insured's failure to reject the carrier's offer to defend with a reservation of rights." Merchants, supra, 37 N.J. at 126. But "to spell out acquiescence by silence," the reservation of rights letter "must fairly inform the insured that the offer may be accepted or rejected." Id. at 127-28.

The first judge held that the letter in question failed the test set out in Merchants because it did not literally say you may "accept or reject" the offered defense. But the case does not stand for the proposition that its exact words have to be employed. Here, the letter "specifically disclaimed[ed] coverage for any . . . alleged act, error, or omission that occurred prior to the policy's retroactive date" and for any member of RRMKK. The letter did not in any way reflect or even suggest a unilateral decision by Harleysville"

"An example of an improper unilateral declaration by an insurance company of its intention to defend while reserving the right to disclaim appears in Sneed v. Concord Insurance Co., 98 N.J. Super. 306, 314 (App. Div. 1967)(the company "'will continue to investigate this matter, but reserves any and all of its rights under the policy contract and may at any time, disclaim liability thereunder'"). By contrast, the language used by Harleysville comports with the reservation of rights letters sustained in Neilson v. American Mutual Liability Insurance Co. of Boston, 111 N. J. L. 345, 349 (E.& A. 1933)("'If this is not agreeable to you, we will return the summons and complaint for such action as you think advisable.'"). We perceive no difference between that statement and Harleysville's statement that it was "prepared" to defend "if" the insureds were willing "to accept the reservation," particularly when the letter expressly declined coverage for the only period of time during which the insureds could have had responsibility for Kuhn's actions and suggested that they might want "to retain personal counsel to protect their uninsured interests." In short, because Rubin and Kaplan had been properly notified of the reservation of rights and had not suffered any prejudice from the timing of Harleysville's withdrawl, they had no enforceable claim to the benefits of the malpractice insurance policy.

Relying primarily on Merchants and Griggs, the Scottos and Rubin and Kaplan argue that even if the reservation of rights letter effectively preserved Harleysville's rights, there is liability nevertheless because Harleysville did not disclaim for over three years and finally disclaimed while the malpractice case was still pending. Both of those cases are distinguishable because they involve untimely reservation of rights letters, which is not the case here. While those cases would be pertinent by inference if Rubin and Kaplan had suffered prejudice because of the timing of Harleysville's withdrawal, there was no prejudice here since the "settlement" required nothing of Rubin and Kaplan other than an assignment of rights. "

This woman was the victim of a rape and assault in a housing complex, due to lax security.  Attorneys hired to sue the building didn't show up for trial.  Now she has settled the legal malpractice case against the attorneys.

The Appellate Division, Second Department recognized that there had been potential legal malpractice in the way this law firm handled equitable distribution in this case, and its failure to protect its client.  Wife was client, husband had real property, and due to a failure to file a lis pendens, the real property became part of his bankruptcy estate, rather than the clients. 

"The Firm's contention that it did not depart from the ordinary standard of care applicable to an attorney in a matrimonial action involves factual issues not properly resolved in the context of a motion to dismiss or for leave to amend (see Ehlinger v Ruberti, Girvin & Ferlazzo, 304 AD2d 925). Moreoever, the Firm did not demonstrate that notices of pendency could not have been filed pursuant to CPLR 6501 in the underlying divorce action, since Hirsch not only asserted a claim for equitable distribution pursuant to Domestic Relations Law § 234, but also asserted fraudulent conveyance and constructive trust causes of action which demanded judgment that would affect title to the properties, and successfully sought issuance of a temporary restraining order and the appointment of a receiver to manage all of the properties at issue (see Ehlinger v Ruberti, Girvin & Ferlazzo, supra; Resnick v Doukas, 261 AD2d 375; Elghanayan v Elghanayan, 102 AD2d 803; Leibowits v Leibowits, 93 AD2d 535, 556; cf. Sehgal v Sehgal, 220 AD2d 201; Fakiris v Fakiris, 177 AD2d 540). "

At this stage of the proceedings, Hirsch need not establish actual damages, but is only required to set forth allegations from which damages attributable to the defendant's alleged malpractice might be reasonably inferred (see Kempf v Magida, 37 AD3d 763; InKine Pharm. Co. v Coleman, 305 AD2d 151). The proposed amended pleading met this standard by alleging that the filing of a notice of pendency would have provided constructive notice of Hirsch's claims in the divorce action and thereby prevented the eight properties from becoming part of the estates in bankruptcy of the Trust Entities and/or of Hirsch's former husband (see CPLR 6501; 11 USC 544[a]; Goldstein v Gold, 106 AD2d 100, 102, affd 66 NY2d 624; In re Borison, 226 BR 779, 787-788; In re Eadie Properties, Inc., 31 BR 812, 814-815). As the Firm did not demonstrate that these allegations are palpably insufficient as a matter of fact or law, leave to amend the counterclaim [*3]should have been granted and the motion to dismiss denied.

It seems that everyone involved in this case of suspected child abuse did the correct thing, which was to report the suspected behavior.  All were sued, and all gained dismissal. The case.

.KAPLAN V. PUCKETT (2006-SC-18-DG)

Here is a legal malpractice case from Kentucky, with briefs.

"Legal malpractice. Puckett was found guilty of arson-related murder. Puckett was acquitted at new trial granted because prosecution witness had withheld exculpatory evidence at first trial. Puckett subsequently prevailed in legal malpractice action against original defense counsel. The issue is whether the malpractice verdict may stand in light of the withheld evidence."
Discretionary review granted 8/17/2006
Jefferson Circuit Court, Judge F. Kenneth Conliffe
For Movant: George R. Carter
For Respondent: Bill V. Seiller

Appellant’s Brief
Appellee’s Brief
Appellant’s Reply Brief
COA OPINION: 2004-CA-001750 (PDF)

This attorney prosecuted class actions for big settlements.  Now his millions in fees is in jepordy, based on the allocation of expenses between the groups of clients. The Story.

"Three former clients of trial lawyer John O'Quinn could be receiving millions of dollars back after an arbitration panel ruled the prominent Houston attorney improperly deducted expenses from settlements he won for them.

The three-person panel could decide this month if O'Quinn would have to give back any money. O'Quinn could be forced to return the $18.9 million in expenses plus all of his fees, estimated to be $580 million.

A March panel decision obtained by the Houston Chronicle showed a majority thought the deduction of a total of $18.9 million from the plaintiffs' settlements was improper. The decision also said the 1.5 percent of general expenses collected by O'Quinn from the women were not authorized by his client contracts. "

Baker Donnelson reports that the US Supreme Court has issued a ruling in Bell Atlantic Corp. v. Twombly an anti-trust case which may revolutionize pleading in all civil cases. 

"In an antitrust case decided on May 21, 2007, the United States Supreme Court abandoned a fifty-year-old liberal pleading rule in favor of a significantly tougher standard applicable to all civil cases that may make it more difficult for plaintiffs to sue and easier for defendants to end lawsuits early, avoiding expensive litigation. The Court's rejection of the old standard is unequivocal: the court's old formulation, quoted for half a century in numerous opinions of the Supreme Court and the lower courts, "is best forgotten as an incomplete, negative gloss on an accepted pleading standard."

THEIR CONCLUSION?\

"For fifty years, courts have evaluated all civil complaints under the standard set forth in Conley v. Gibson, 355 U.S. 42 (1957), which allowed cases to proceed through the process of pre-trial discovery unless, based on the claims alleged in the complaint, the plaintiff could prove "no set of facts in support of his claim which would entitle him to relief." This meant that under Conley, a case brought under the labor and employment laws, a plaintiff needed only to make allegations that put defendants on notice of what the plaintiff's claims were without asserting all of the facts that supported the plaintiff's conclusion that the law had been violated. As long as some set of facts might exist to support the plaintiff's conclusions, the case could go forward. But in Twombly, the Supreme Court rejected this standard, noting that it has "earned its retirement."

The Supreme Court's new standard asks not whether it is conceivable that some set of facts could be developed to support the allegations in the complaint, but rather whether the plaintiff has stated enough facts in the complaint to allow a court to conclude that it is plausible that the plaintiff is entitled to relief. Thus, defendants can avoid the costs and burden of responding to a complaint and to a plaintiff's request for discovery by convincing the judge that the plaintiff's claims are implausible even if they might be remotely possible. Conley was not an antitrust case, and the Court's rejection of Conley was not limited to antitrust cases. It is likely, therefore, that this new pleading standard will be adopted in civil cases generally. "

A sometimes defense in legal malpractice is "preemption."  The defense would be that regular rules of legal malpractice do not apply because a federal or state law has so occupied the field, that its rules take over.

Here is a short blurb about ERISA not preempting the field for a legal malpractice case.

Here is a blog blurb from an Indiana Case:

"In Norman R. Carlson, Jr., et al v. Sweeney, Dabagia, Donoghue, Thorne, James & Pagos, et al, a 28-page opinion dealing with questions of alleged attorney malpractice in will drafting, Judge Robb writes:

Norman R. Carlson, Jr., individually, and as executor of the estates of Norman R. Carlson and Hilda D. Carlson, and as Trustee of the Trust established under the last wills and testaments of Norman Sr. and Hilda, Margaret Ann Carlson, Beth Carlson Montigue, and David R. Carlson, (when referred to collectively, the “Carlsons”), filed a complaint against the law firm of Sweeney, Dabagia, Donoghue, Thorne, Janes and Pagos, and lawyer John H. Sweeney (the “Lawyers”), alleging legal malpractice that resulted in adverse tax consequences. The Lawyers filed a motion for summary judgment, raising two issues. The trial court denied the Lawyers’ motion as to one issue, but granted it as to the other. The Carlsons now appeal, raising a single issue, which we restate as whether the trial court properly granted summary judgment based on its determination that reformations to the Wills drafted by the Lawyers effectively eliminated any malpractice that occurred relating to the drafting of the original Wills. On cross-appeal, the Lawyers raise a single issue, which we restate as whether the trial court properly denied its motion for summary judgment on the grounds that the original Wills would result in adverse tax consequences. The Lawyers also raise the following issues: 1) whether the “substantial adverse interest exception” protects the Carlsons from adverse tax consequences; 2) whether the Carlsons have brought this suit too early, as the IRS has not yet assigned a tax penalty; and 3) whether the trial court improperly considered the opinion of an attorney hired by the Carlsons. We conclude the adverse interest exception does not protect the Carlsons, the Carlsons are not precluded from bringing their suit at this time, and that the Lawyers waived their argument relating to the opinion of the expert witness by not raising it before the trial court. We further conclude that the trial court properly found that the original Wills would result in adverse tax consequences, and affirm the trial court’s denial of the Lawyers’ motion for summary judgment on that issue. However, we conclude that the reformations did not effectively avoid potential adverse tax consequences, reverse the trial court’s grant of summary judgment on that issue, and remand for further proceedings. * * *

Conclusion We conclude that the trial court properly determined that the original Wills did not establish an ascertainable standard regarding a Trustee’s ability to invade the trust corpus; that the “adverse interest” clause does not protect the Trust from tax liability; and that the Carlsons did not bring this suit prematurely. Therefore, we affirm the trial court’s denial of the summary judgment motion on these grounds. We also conclude that the reformations did not comport with Indiana law, and that the trial court therefore improperly granted summary judgment. We therefore reverse the trial courts grant of summary judgment and remand for further proceedings."

AVVO a new lawyer search web site is up and  running. "a online legal services startup led by Expedia veteran Mark Britton, is unveiling its website after more than a year of development.

Avvo.com allows consumers to search for lawyers by name, practice area, or location and get ratings and profiles for them. The website is free to consumers and supported by online advertising.

Each lawyer's profile includes license status, disciplinary sanctions, practice areas, education, a list of awards and publications, as well as client ratings and peer endorsements. The site gives lawyers an overall rating based on their experience and record.

Avvo collects its information from public sources including courts, state bar associations and law firm websites. Client ratings and peer endorsements are submitted by visitors to the site.

Avvo is the brainchild of Britton, who previously served as general counsel at Bellevue online travel site Expedia Inc. (NASDAQ: EXPE). "

Yes, it is still good in Legal Malpractice, and Yes it is still good in Medical Malpractice, but the Court of Appeals took a big, big step yesterday, and ruled that it was not applicable to accountants filing yearly tax returns, or yearly accountings.  PriceWaterhouse won the case, and  Judge Theodore Jones wrote the decision.Law.Com reports on the decision:

"The doctrine of continuous representation cannot be invoked in situations where accountants are providing "separate and discrete" annual audits to clients and not more extensive accounting services, the State of New York Court of Appeals ruled unanimously Thursday.

The decision in Williamson v. PricewaterhouseCoopers LLP , 64, had been anxiously awaited in the accounting industry since the Appellate Division, 1st Department, ruled last year that PricewaterhouseCoopers had a continuous relationship with two failed hedge funds it audited annually.

This was the first time the court weighed in on the continuous representation doctrine in an accounting context. The opinion was written by Judge Theodore T. Jones. "
In deciding that PricewaterhouseCoopers did not have a continuous representation relationship with the hedge funds, Lipper Convertible and the Lipper Fixed Income Fund, the court relieved PricewaterhouseCoopers of malpractice liability for the five years, from 1995 to 1999, it audited the funds' year-end financial statements and declared them a reasonable indication of the funds' financial positions.

Missing Documents can be a lawyer's nightmare.  Here is a follow up on the Qualcom story from American lawyer:

"A week after the public learned of Qualcomm Inc.'s bombshell admission that it withheld potentially thousands of important documents in a high-stakes patent trial against Broadcom Corp., many in the intellectual property community are still buzzing about the gaffe.

The case is even more striking because the attorney who has publicly apologized for Qualcomm's error has a strong reputation in his field, as does his firm. Yet several attorneys say it's still too early to assign blame for the error.

"Whenever there are accusations of concealment of evidence and they prove to be true, there definitely is going to be harm to the lawyers and the parties," said Anup Tikku, an IP associate with Kirkpatrick & Lockhart Preston Gates Ellis, who has followed the case closely. "What I find difficult to understand is how Qualcomm interviewed witnesses, put them on the stand and did not realize these documents existed."

Ross Todd at the American Lawyerwrites:

"San Diego City Attorney Michael Aguirre, who has already led the city's charge to sue two Am Law 100 firms, has a third in his sights. In an April report, Aguirre recommended that the city take legal action against Willkie Farr & Gallagher because of what Aguirre called a "failed" investigation into the city's $1.4 billion understatement of its pension debt. Aguirre says that Willkie Farr overbilled the city and produced a report that was "a mile wide and an inch deep."

Willkie Farr partner Michael Young, responding to requests for comment on behalf of himself and partner Benito Romano, said, "We are not going to express our views on the matter."

The San Diego pension scandal has given rise to multiple lawsuits. In late 2005 the city sued long-time bond counsel Orrick, Herrington & Sutcliffe, among other advisers, claiming that the firm knowingly approved inaccurate financial disclosures. Then, in July 2006, the city sued Vinson & Elkins, alleging that V&E ran up a $6 million bill while conducting a flawed investigation of the pension fiasco. Both cases are moving toward discovery, according to Dan Stanford of San Diego's Stanford and Associates, the city's outside counsel in each case. "

Bad faith litigation is usually a situation where the case could be settled within the policy limits, but that chance is lost and the verdict exceeds the policy limits.  Here is the inverse.  The carrier settles a case within the policy limits but the insured [in this case a doctor] did not want to settle, and sues the carrier for settling in bad faith.

"A Florida appellate court has recognized a new statutory bad faith cause of action in medical malpractice claims. In Rogers v. Chicago Ins. Co.,1 the fourth district court of appeal held that an insured has a private cause of action under section 627.4147, Florida Statutes, which requires that settlement offers be made in good faith and in the best interests of the insured.

In Rogers, a medical doctor sued his professional liability insurer for failing to properly investigate the malpractice claim filed against him, as required by section 766.106,2 Florida Statutes. He alleged that the insurer had acted in bad faith under section 627.4147 by settling a completely defensible claim, causing him damages such as his inability to obtain medical malpractice insurance, which limited his practice.

In 1985, the Florida Legislature enacted section 627.4147, titled “Medical malpractice insurance contracts.” Subsection 627.4147(1)(b) provides that it is against public policy for any insurance policy to contain a clause giving the insured the exclusive right to veto a settlement offer within the policy limits. It also provides that “any offer of admission of liability, settlement offer, or offer of judgment made by an insurer or self-insurer shall be made in good faith and in the best interests of the insured.”

Will this principal spread to legal malpractice?

Its bad enough when an attorney makes mistakes which cost the client.  Here, its not even an attorney!  The NY TImes Story:

"A Long Island man who worked as a lawyer at a major New York law firm for four years — even though, prosecutors said, he had never gone to law school — pleaded not guilty yesterday in State Supreme Court to charges of impersonating a lawyer and stealing at least $284,350 in salary from his firm."

This report from Hinshaw discusses a Georgia case in which an attorney did not file a verification in an anti-SLAPP suit.  It was a mistake, but the question of whether he had to file a verification was "unsettled."  So far, [summary judgment denied], the client's legal malpractice case remains viable.  Moral ?  Advise the client of unsettled law .

"Chatham Orthopaedic Surgery Center, LLC., et al. v. White, 640 S.E.2d 633 (Ga. Ct. App. 2006)

Brief Summary
The court upheld summary judgment in favor of an attorney on the issue of negligence in failing to file a necessary verification under an anti-SLAPP statute because prior case law was unclear at the time. Nonetheless, the court reversed summary judgment in the attorney’s favor on a separate claim to the effect that the attorney was negligent in not advising his client of the risk of not filing a verification in light of the unsettled state of the law. "

General Obligation Law Sec. 15-108 has long been a trap and a well known trap at that.  Settle with one defendant, and the rest of them get to try their case against an empty seat, and get the greater of the settlement amount or the equitable share of the settling defendant.

But, as of Today new legislation changes all of that!

CHAPTER TEXT:
LAWS OF NEW YORK, 2007

CHAPTER 70

AN ACT to amend the general obligations law, in relation to the impact
of litigation settlements upon the remaining parties to the action

Became a law June 4, 2007, with the approval of the Governor.
Passed by a majority vote, three-fifths being present.

The People of the State of New York, represented in Senate and Assem-
bly, do enact as follows:

Section 1. Section 15-108 of the general obligations law is amended by
adding a new subdivision (d) to read as follows:
(d) Releases and covenants within the scope of this section. A release
or a covenant not to sue between a plaintiff or claimant and a person
who is liable or claimed to be liable in tort shall be deemed a release
or covenant for the purposes of this section only if:
(1) the plaintiff or claimant receives, as part of the agreement,
monetary consideration greater than one dollar;
(2) the release or covenant completely or substantially terminates the
dispute between the plaintiff or claimant and the person who was claimed
to be liable; and
(3) such release or covenant is provided prior to entry of judgment.
§ 2. This act shall take effect on the thirtieth day after it shall
have become a law and shall apply to all releases or covenants not to
sue effective on or after such effective date.

Here is the sponsor's memo:

"SPONSORS MEMO:NEW YORK STATE SENATEINTRODUCER'S MEMORANDUM IN SUPPORTsubmitted in accordance with Senate Rule VI. Sec 1
BILL NUMBER: S3739

SPONSOR: DEFRANCISCO

TITLE OF BILL: An act to amend the general obligations law, in
relation to the impact of litigation settlements upon the remaining
parties to the action

This measure, a predecessor of which the Legislature passed in 2006, is
one in a series of measures being introduced at the request of the Chief
Administrative Judge on the recommendation of his Advisory Committee on
Civil Practice. The 2006 measure contained a technical defect that
required its disapproval (see Veto #259-2006). This current draft
corrects that technical defect.

This measure would amend section 15-108 of the General Obligations Law
("G.O.L.") to exclude certain releases from its scope, most importantly
including those instances in which the plaintiff voluntarily discontin-
ues his or her suit against a particular defendant without receiving any
monetary consideration for that release. This would encourage plaintiffs
to voluntarily release those defendants who appear not to bear any
liability, which would in turn reduce the litigation costs of those
ostensibly blameless defendants. The amendment would also make many
summary judgment motions unnecessary, and would thus reduce the burden
on the court system.

Section 15-108 of the G.O.L prescribes the consequences which ensue when
a tort plaintiff releases from liability one or more, but fewer than
all, of the alleged tortfeasors. In broad strokes, current G.O.L.
§15-108 applies when a plaintiff settles with a "tortfeasor" (usually,
but not invariably, a defendant). In such event, current subdivisions
(b) and (c) provide that the settling tortfeasor can neither seek
contribution from the other tortfeasors nor be held liable for contrib-
utions to the others, the underlying theory being that the settlor has
brought his or her peace. The settling tortfeasor can, however, seek
indemnification from the other tortfeasors, and may also be sued there-
for.

A significant issue arises when, during the course of discovery, it
appears that a defendant whom plaintiff initially thought might bear
some liability was, in fact, blameless. Because the plaintiff and
plaintiff's counsel generally do not want superfluous parties that must
be served with every single document and consulted about court dates and
deadlines, the plaintiff would generally like to give such a defendant
his or her "walking papers." Of course, that is also what the ostensibly
blameless defendant would like - - to be released immediately and with-
out incurring any further attorney's fees. It is also what the court
system would prefer to happen.

There is, however, a problem. If the plaintiff were to release the
apparently blameless defendant, and if one of the remaining defendants
were to prove at trial that the released defendant was indeed partially
at fault for the plaintiff's damages, then the defendants still left in
the case would be entitled to a reduction of their liability. See

KILLEEN V. REINHARDT, 71 A.D.2d 851,419 N.Y.S.2d 175 (2nd Dept. 1979).
In that case, the plaintiff's magnanimous discontinuance would result in
a reduction of the plaintiff's damages, and in under compensation. Such
a reduction, which in theory could amount to a significant percentage of
plaintiff's economic and non-economic loss, could occur even though the
plaintiff did not receive any consideration for the discontinuance, and
it could occur even if none of the facts or claims establishing the
culpability of the released defendant had been asserted, or known, when
plaintiff discontinued.

This feature of G.O.L. §15-108 may be a trap to those unfamiliar with
the statute, but it is well known to experienced plaintiff's counsel.
Their reaction is precisely what one would expect. Knowing that a volun-
tary discontinuance can cost the plaintiff thousands or even millions of
dollars if new facts and new theories point the finger of blame at the
released defendant, and also knowing that there is no risk of any such
penalty if the ostensibly blameless defendant instead moves for and
receives summary judgment from the court, the plaintiff's attorney will
typically answer a request for a discontinuance by saying, to extricate
yourself, you must make a summary judgment motion.

In this situation in which an ostensibly blameless defendant seeks to
drop out of the lawsuit, the other defendants might not mind if that
occurs. . . provided that they, the other defendants, can commence their
own third-party claims if and when it seems wise to do so, for they too
are concerned that a defendant who now appears blameless may later
appear to bear some responsibility. The problem, from their perspective,
is that they will not be allowed that choice. If plaintiff discontinues
against the ostensibly blameless defendant, then, per the current stat-
ute, that defendant cannot be sued for contribution. And if the osten-
sibly blameless defendant moves for and receives summary judgment, then
that defendant is forever free from liability. . . no matter what turns
up later on. For these reasons, the remaining defendants are virtually
forced to oppose the summary judgment motion, even if they would have
preferred to provisionally allow the movant to leave, so long as there
is any arguable basis for opposition.

Thus, what might have been a consensual discontinuance instead becomes a
contested motion, and, perhaps, after the motion is resolved, a
contested appeal.

The proposed amendment would eliminate three kinds of releases from the
statute's scope, but only two of the exclusions constitute changes as
compared to current law.

First and foremost, discontinuances given without monetary consideration
would be removed from the statute's scope, meaning that a plaintiff
could discontinue without risk of being penalized for doing so. This
would help the ostensibly blameless defendants to get out of the case as
quickly and as inexpensively as possible. It should be noted that, in
an instance in which the plaintiff initially sued and thereafter
released an individual or corporate entity without monetary consider-
ation for the release, the remaining defendants' rights against that
released individual would be exactly the same as if the individual had
never been sued in the first place. More specifically, the remaining
defendants would have the same rights that they would have initially had
to implead the individual and thereby seek contribution or indemnity or
to instead seek a CPLR Article 16 set-off by reason of the individual's
culpability. Of course, under the terms of Article 16, the Article 16
set-off would apply only to the plaintiff's non-economic loss, and then
only if the party seeking the set-off was assigned 50% or less of the
culpability.

Second, by limiting the statute to those releases that "completely or
substantially" terminate the dispute against the released defendant, the
new subdivision would effectively exclude "high- low" agreements in
which the parties agree to confine the damages to an agreed range. The
subdivision would also effectively exclude agreements in which the
parties merely narrow the issues (perhaps, by conceding liability, or
jurisdiction) without fully resolving the action.

The exclusion of high-low agreements constitutes a change, although the
current rule is not well-settled. The exclusion of other issue narrowing
agreements may or may not constitute a change; the current rule is not
clear enough to say. In any event, the "completely or substantially
terminates" limitation is not the main point of the amendment, and is
not likely to have as pronounced an impact as the "greater than one
dollar" limitation. However, the Committee advocates the "completely or
substantially terminates" provision because there is no policy reason
why issue-narrowing agreements should be deterred or why such agreements
should engender windfall consequences for the other parties.

The exclusion of post-judgment settlements would be a codification of
current law. The Court of Appeals long ago ruled that the statute does
not apply to post-judgment settlements, and that rule has never been
seriously questioned since then. The proposal codifies that rule because
(1) the rule sensibly allows the plaintiff to accept a partial payment
from one defendant who may have no other assets except for his or her
personal possessions, and to do so without unintentionally releasing the
other defendants, and (2) adoption of a new, statutory exclusion that
did not expressly recognize the existent, common-law exclusion could
conceivably be construed as a rejection of it.

This measure, which would have no fiscal impact on the State, would take
effect 30 days after such time as it shall have become law, and it shall
apply to all releases or covenants not to sue effected on or after such
effective date. "

Proving mistakes by an attorney is really the least difficult aspect of litigating a legal malpractice case.  Technical aspects of the action, such as timelyness, pleading, proximate cause, and privity often overshadow a simple analysis of mistakes.

Here is a case from Michigan in which the attorney filed a divorce action in the wrong county!  Howver, plaintiff could not demonstrate damages.  They tried gamely to show that the plaintniff had to rent an apartment in the next county, and had to spend money to move around.  Result?  No damages.

Often, a losing criminal defense attorney will. because they are usually really sympathetic guys, go to bat for a client by allowing the client to 'give them up."  This usually comes up at an ineffective counsel application by the defendant.  Here is a prime example:

"A defense attorney tried a different argument for why his convicted client should be given a new murder trial: the attorney was too sleepy.

Charles R. Curbo wrote in a motion for a new trial that he could not properly represent the defendant, Tony Wolfe, because he was tired during the six-day trial in January.

"The court constantly rushed defense counsel, who the court knew had little sleep on account of the hours that the court was keeping for no good reason," Curbo wrote.

But Assistant District Attorney General David Zak, who prosecuted the case, said he saw no lack of enthusiasm from the defense.

"I saw no change in legal ability from Monday to Saturday," Zak said. "The defense attorney showed anger, passion and zeal in representing his client. There was never a moment when he was running out of gas."

Wolfe was convicted of first-degree murder for shooting 27-year-old Leondus Hawkins in September 2004 at a service station parking lot. He was sentenced to life in prison.

But both sides said the trial held long and late hours due to the defendant's medical condition and because the judge wanted to send the sequestered jury home as quickly as possible.

Wolfe required dialysis treatments every other morning and kept the trial from starting until early afternoon for some days. The proceedings went on until 10 or 11 p.m. on some days.

"My client is already worn out from dialysis and they make him stay up there until 11 at night and he can't remember his name hardly," Curbo said.

Attorney 1 started a trip and fall case against City and Contractor A.  After two years he was substituted out, and Attorney 2 started a new action against Contractor B.  The two actions were consolidated and eventually Contractor A won the case.  Contractor B paid $ 100,000 and the City paid $ 50,000.

Is Attorney 1 entitled to fees?  Is Attorney 2 entitled to Fees? 

"The motion, by order to show cause, of plaintiffs' attorney, Theodore Oshman, Esq., of Oshman & Mirisola, LLP (hereinafter "movants") [Attorney 2] for an order restoring this matter to the active calendar, allowing plaintiffs' counsel to deposit all proceeds in its escrow account to allow for the distribution of funds to the plaintiffs and setting this matter down for a hearing on the issue of attorney's fees, is granted.

The cross-motion by plaintiffs' former attorney, Barry S. Gedan, Esq., {Attorney 1]  for an order disqualifying plaintiffs' current attorneys from receiving any attorneys' fee in this action upon grounds of misconduct by them, requiring the plaintiffs' current attorneys to refund to the plaintiffs their entire claimed contingent attorneys' fee plus disbursements, declaring that the entire portion of the settlement proceeds, in the amount of $50,000, be paid by defendant, The City of New York (hereinafter "City"), Barry S. Gedan, Esq., or in the alternative, requiring that the City deposit the $50,000 settlement in this action in an interest bearing account at Mr. Gedan's bank, requiring the movant to provide a detailed list of the legal services it provided on behalf of the plaintiffs and requiring that the movant provide Mr. Gedan with a copy of the file in this case, is denied in its entirety.
Mr. Gedan is entitled to recover in quantum meruit, " . . . the fair and reasonable value of the services rendered . . . " Lai Ling Cheng v. Modansky Leasing Co., Inc., 73 N.Y.2d 454 (1989); Judiciary Law §475. However, Mr. Gedan is entitled to recover for services rendered to the plaintiffs in the initial action involving the City only. In Cataldo v. Budget Rent A Car Corp., 226 A.D.2d 574 (2nd Dept. 1996), the court stated, " . . . before an attorney can be granted a lien pursuant to Judiciary Law §475 he or she must have appeared for the client by 'participating in a legal proceeding on the client's behalf or by having his [or her] name affixed to the pleadings, motions, records, briefs, or other papers submitted in the matter'" (citations omitted). Mr. Gedan did not represent the plaintiffs in the action against Columbus and he has failed to demonstrate that any of the work he performed resulted in the lawsuit against Columbus. He has not demonstrated that he is entitled to any fees from the settlement in the action involving Columbus as he did not commence the action against Columbus and had no involvement in that action whatsoever.

Accordingly, Mr. Gedan is only entitled to recover for services rendered in the initial action involving the City. Movants are permitted to deposit the proceeds of the settlement involving the City in its escrow account pending a determination of the fees Mr. Gedan is entitled to receive. Moreover, movant is permitted to distribute the plaintiffs' share of the funds. Plaintiff, Melia Rothfeder is now more than eighty-four (84) years of age and is entitled to her share of the funds without having to wait for a determination in the fee dispute involving her present and former attorneys. "

Attorney Harry H. Kutner, Jr. had fees overdue and he was waiting for the client to pay.  Sound familiar?  Today's NYLJ , written by Daniel Wise reports:

"The retainer agreement, drafted by Mr. Kutner, gave Mr. Antonacci 15 days from the time a bill was sent out to make payment without being assessed interest.

In the event payment was not made within 15 days, the agreement explained that a 16 percent interest rate would be assessed to "encourage your prompt raising of any disputed time or services billed" and "to prevent an outstanding balance from being a source of friction between you and me, thereby protecting the fragile attorney-client trust arrangement."

In the agreement, Mr. Kutner also explained that he was charging 16 percent interest because, otherwise, in effect, he would be subsidizing a loan to Mr. Antonacci who would have had to pay at least 16 percent to borrow the funds on his credit card. "

"A requirement in a retainer agreement compelling a client to pay 16 percent interest on unpaid fees is excessive and unenforceable, a Nassau judge has ruled.

Instead, the client must pay interest on the unpaid fees at a rate of 9 percent, the amount of interest allowed by statute to be collected, both pre- and post-judgment, on amounts found collectible by courts, District Court Judge Gary F. Knobel ruled in Kutner v. Antonacci, 36363/06. [subscription]

When an attorney represents a soon-to-be testator, and there are problems after death, several principles of legal malpractice law arise: privity, statute of limitations, proximate cause.  Here is a NJ case which discusses several of the issues and gives a well written account of how the principles play out. 

Plaintiff is a surviving child, and is joined by her two sisters.  Result is that the estate may have a cause of action, and one sister may have an individual cause of action, but that the two remaining sisters lose.

"Given the wording of the agreement prepared by defendants, Clara may have had a reasonable expectation of representation as an "individual" as well as executrix. Cf. President v. Jenkins, 180 N.J. 550, 562-63 (2004) (insurance policy); Schor v. FMS Financial Corp., 357 N.J. Super. 185, 193-94 (App. Div. 2002) (need for extrinsic evidence). Defendants do not claim they expressly advised her that their representation was limited to her duties and responsibilities as executrix, irrespective of the impact on her as an individual or tax consequences to her personally, and thus it could have been "reasonable" for her to have so understood the retainer. See Restatement (Third) of the Law Governing Lawyers, § 19 (2000); id. at § 19 cmt. c. See also R.P.C. 1.2(c). Moreover, as the Restatement now confirms,

In trusts and estates practice a lawyer may have to clarify with those involved whether a trust, a trustee, its beneficiaries or groupings of some or all of them are clients and similarly whether the client is an executor, an estate, or its beneficiaries. In the absence of clarification the inference to be drawn may depend on the circumstances and the law of the jurisdiction.

[Restatement, supra, § 14 cmt. f.]

See also American College of Trust and Estate Counsel, ACTEC Commentaries on the Model Rules of Professional Conduct, Commentary on MRPC 1.2 (3d ed. 1999). Defendants had an obligation to define the scope of their representation of Clara more clearly. Accordingly, we reverse the grant of summary judgment as to Clara.

B.

The claim of Clara's sisters requires a different evaluation. As such, it must be asked if the "non-clients will rely on the attorneys' representations and the non-clients are not too remote from the attorneys to be entitled to protection." Petrillo, supra, 139 N.J. at 483-84; see also Stewart, supra, 142 N.J. Super. at 593. The non-clients in this case are beneficiaries, and the tax burden affected them individually, if not differently. In deciding the issue before us, the overarching inquiry "involves a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution." Estate of Fitzgerald, supra, 336 N.J. Super. at 468 (quoting Barner, supra, 292 N.J. Super. at 261 (quoting Goldberg v. Hous. Auth. of Newark, 38 N.J. 578, 583 (1962))). See also Banco Popular N. Am. v. Gandi, 184 N.J. 161, 179-81 (2005); Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993); Restatement, supra, §§ 51, 56 cmt. c. As such, we must consider whether the beneficiaries' interest is adverse to the testator's intent or the interest of the Estate and what the reasonable expectation of the sisters may have been.

Plaintiffs contend that "Lolio was certainly aware of the identity of the two other beneficiaries" and that the beneficiaries' "familial relationship to the executrix . . . is certainly not 'too remote' to absolve [him] from liability for deviations from accepted standards of legal practice[.]" They further assert that Clara "certainly invited her two sisters to rely upon Mr. Lolio's opinion and actions in assisting [Clara] in settling their deceased mother's estate[,]" and that Clara "owed a fiduciary duty to her two sisters of which Mr. Lolio was certainly aware, and his failure to advise that the use of the IRA moneys to pay federal estate taxes exposed Clara Heffernan to liability for breach of her fiduciary duties . . . ."

The winner of the Anna Nicole Smith lottery, who won in part because of his attorney, is now suing her to avoid a $ 600,000 legal bill.  Details.

"Anna Nicole Smith's ex-boyfriend filed a lawsuit Friday against the celebrity attorney who helped him prove he is the father of Smith's baby daughter.

Larry Birkhead's lawsuit, filed in Los Angeles Superior Court, comes three days after lawyer Debra A. Opri filed papers seeking to force him into arbitration to resolve her $620,000 legal bill.

Birkhead's lawsuit alleges legal malpractice, breach of fiduciary duty, conversion and fraud.

Birkhead maintains he is owed $885,000 paid to him by NBC Universal that Opri allegedly placed in a trust account.

He also claims Opri disparaged Smith in the media and attended her funeral despite Birkhead's objections, and that she leaked confidential information to an MSNBC reporter against his wishes as a payback to the reporter for referring Birkhead to her as a client.

According the lawsuit, Opri initially told Birkhead she was a believer in the rights of fathers and would not charge for her services because the case would benefit her legal career. He later paid her $20,000 that she told him were costs associated with the paternity litigation.

Opri, through her spokesman, James C. Levesque, issued a general statement Friday claiming "Mr. Birkhead continues to release misleading information to the media that skirts the issue of his unpaid legal fees."

In addition to the television deal, Birkhead has received millions of dollars from selling photos of his daughter, making him capable of paying his overdue legal fees, according to the statement.

A hearing on Opri's attempt to compel arbitration is set for July 9, according to the statement. "

We reported on this case a week ago, but here is another take on the issue of PA Appeals and vagueness:

"A Pennsylvania Superior Court panel has affirmed the dismissal of a legal malpractice action brought against Fox Rothschild by two brothers who claimed the firm's handling of a family will left their inheritance lighter than it should have been.

However, the majority in Hess v. Fox Rothschild ruled that Philadelphia Common Pleas Judge Annette M. Rizzo had been wrong to reject the brothers' appeal as too vaguely worded.

The case sheds light on a rare theme in the ongoing Pennsylvania Rule of Appellate Procedure 1925(b) saga.

Typically, state court judges have used that appellate procedural rule to bounce an appeal if the appellate statement was too long and/or raised too many issues.

But the rule also directed attorneys not to make their statements overly vague, and a number of appeals were quashed under that provision of the rule.

When the justices approved amendments to Rule 1925 earlier this month, they prospectively precluded judges from nixing an appeal solely because of the number of issues raised. That measure was likely in response to practitioners' gripes that appeals in complex or high-stakes cases might necessarily involve dozens of issues.

But the high court also added new language to the rule that will permit civil litigation appellants to attach to their 1925(b) statements a preface explaining the statement has been phrased in general terms because the appellants don't believe they can "readily discern the basis" for trial judges' decisions. "

Here is a NJ case on legal malpractice insurance coverage for retired partners who continue handling certain matters.

"Thanks to ambiguous and vague policy language, a professional liability carrier will have to cover a law firm partner for malpractice allegedly committed after he left an insured firm, a New Jersey appeals court says.

The judges ruled on May 25 that where a policy limited coverage for a firm's retired partners but not for partners who still practiced law and handled cases referred by the firm, the policy would be read against the carrier, Zurich Specialties London Limited.

"Zurich could have utilized policy language that would have eliminated all ambiguity and which would have put the matter beyond all reasonable question," the judges wrote in Jolley v. Marquess, A-4513-0. "Zurich did not do so; therefore, we construe the ambiguity in favor of coverage, which is the approach long favored in this state."

The judges noted, however, "Our own research, and that of the parties, yields no reported decisions in this state construing this policy language."

In 1997, John Marquess, a partner at what was then Marquess, Morrison and Trimble in Turnersville, N.J., represented defendant Barbara Gorna in an automobile accident case. The case was assigned by Gorna's insurer, American Independent Insurance Co., a client of the firm.

In 2000, Marquess was bought out by his two partners but, with their consent, continued to represent Gorna as a Haddonfield, N.J., solo. No substitution of attorney appears to have been filed.

The same year, a jury found Gorna 100 percent liable for the injuries to the plaintiff, Kimberly Jolley. Without Gorna's consent, Marquess entered into an agreement with Jolley's attorney that Gorna would pay Jolley $750,000, plus interest, in damages. Marquess told Gorna she would not be responsible for the judgment above her $15,000 coverage limit, but that was not stated in the agreement.

Attorney is hired to fix IRS problems.  Tells Client to give he a check, and he will pay the IRS.  Check cashed, IRS not paid, Attorney arrested, and now a legal malpractice case.  Here is the story.

"BENTONVILLE -- A Bentonville attorney arrested on fraud and theft charges has been sued by the mother and son who told police he mishandled amendments to their 2005 federal tax returns and Internal Revenue Service payments.

Rogers attorney Timothy C. Hutchinson filed the suit Wednesday in Benton County Circuit Court on behalf of Carol L. Fountain and Charles Fountain.

Archer was arrested earlier this month on criminal charges related to incidents addressed in the civil suit. He remains in the Benton County Jail in lieu of a $75,000 bond and is set to be arraigned July 2.

The civil suit claims the Fountains retained Archer in April 2006 to handle filing of amended tax returns that included income from an inheritance the Fountains received.

Archer told Carol Fountain she owed $36,000 to the IRS, and he asked the check be made out to him and he would forward the money.

Rather than paying the IRS, Archer cashed and presumably spent the money, the suit claims, and the tax return was never filed. "

This story from law.com:

"A rare U.S. Court of Appeals for the Federal Circuit decision that declared a patent unenforceable because of the patent attorney's inequitable conduct during the patent application process is likely to increase lawyers' disclosures to the patent office.

On May 18, the court upheld a California federal court decision that declared a McKesson Information Solutions August 1989 patent involving bar-coding technology for hospitals unenforceable.

The Federal Circuit agreed with the lower court that patent lawyer Michael Schumann acted with deceptive intent by withholding three key items of information from the U.S. Patent and Trademark Office, including details about prior art and a rejected co-pending patent application.

Schumann, who is now with Minneapolis-based intellectual property firm Hamre, Schumann, Mueller & Larson, declined to comment. "

The details are a little sparse in this story but after losing a $ 6.5 milliion medical malpractice case, the hospital and its attorney are now on the hook for a $ 1.3 million sanction too.

"A Parkersburg-area hospital has been ordered to pay a $1.3 million sanction in a medical malpractice lawsuit. This after a judge says it violated court orders, among other misconduct, during a recent trial.

Wood County Circuit Court Judge Robert Waters imposed the sanction against Camden-Clark Memorial Hospital in an order issued last week.

Waters' order says Camden-Clark's misconduct included inaccurate answers during the discovery process and inaccurate testimony.

This order came from an underlying lawsuit alleging the malpractice in the death of Hilda Boggs.

Boggs died in 2001 following surgery on a broken ankle. "

A Wood County jury found that the anesthesiologist negligently overdosed Boggs with Lidocaine.

The jury in that case awarded $6.5 million to Boggs' estate in March 2006. The case is now being appealed by the hospital. "

We really can't explain it.  Here is the story.  Was it the unhealthy aspect of french fries ?  Was it residual anti-French feelings from the Iraq war?  Would "freedom fries" have been OK?

"Saying a bankruptcy judge was "a few french fries short of a Happy Meal" may cost an out-of-state lawyer the ability to practice in U.S. Bankruptcy Court for the Southern District of Florida.

The comment already has cost Chicago-based McDermott Will & Emery partner William P. Smith his client -- Miami Beach's Mount Sinai Medical Center & Miami Heart Institute.

Bankruptcy Judge Laurel Myerson Isicoff in Miami also slapped the hospital with a restraining order at the same hearing where Smith made his fast-food quip. She found Mount Sinai's anti-competitive actions in the bankruptcy case of South Beach Community Hospital violated bankruptcy law.

During a May 7 hearing, Smith told Isicoff, "I suggest with respect, your honor, that you're a few french fries short of a Happy Meal in terms of what's likely to take place."

Smith's comment and a show-cause order against him were first reported by the legal blog Above the Law.

Smith did not return calls for comment, and Mount Sinai spokeswoman Kathleen Dorkowski declined to comment on the case.

McDermott Will & Emery issued a statement, saying: "We expect our lawyers to observe established rules and protocols of professional conduct in the courtroom. Any departure from that standard is of concern to us, and we look forward to a resolution of this matter."

Plaintiff is injured in a train accident, and wins $3 million.  Law firm and a money manager both get into trouble. The Story:

 Attorney "Lakin was indicted April 23 on charges of cocaine use and distribution as well as transporting a minor male to Malibu, Calif. with the intent to engage in sexual activity. He is free on a $250,000 unsecured bond and his trial is set to begin Jan. 10, 2008, in Benton. "

"Stephen Williams of Chouteau, Okla. filed suit against the Lakins in federal court on Sept. 26, 2006, after his $3 million-plus, tax-free structured settlement with Union Pacific over a 1991 injury was absconded by money manager-turned thief James Gibson"

"U.S. District Judge Claire V. Eagan, chief judge of the Northern District of Oklahoma, entered the judgment on April 18 after the Lakins did not appear in the case, even after being granted extra time to answer. The case was transferred to the U.S. District Court of the Southern District of Illinois on May 24. "

"In April, the Record reported that Lakin's malpractice insurer, the Illinois State Bar Association Mutual Insurance Co., has not paid the firm's clients over the loss of funds.

Clients of Lakin and other firms lost about $50 million eight years ago when Gibson, the manager of their settlement funds, stole the money. "

Lead Plaintiff in a class action is unhappy with settlement amount, and seeks to sue the class action attorney and sues class action attorney in legal malpractice.  Holding:  plaintiff is collaterally estopped from suing.

Hinshaw reports: "J. Michael Koehler v. Jules Brody, et al., ___F.3d___, 2007 WL 895864 (8th Cir. 2007)

Brief Summary

Two years after a court approved a class action settlement, a lead plaintiff brought suit against former class counsel for breach of fiduciary duty and misrepresentation, claiming that the settlement was too low and that it should have been paid in stock to avoid adverse tax consequences. The appellate court affirmed the dismissal of these claims on the ground that the plaintiff was collaterally estopped from suing class counsel to attack the class recovery.

Complete Summary

This case arose out of a global settlement of a number of class action cases related to the merger of NationsBank and BankAmerica into Bank of America. J. Michael Koehler was a lead plaintiff and class representative. The court appointed the firms of Green, Schaaf & Jacobsen, P.C., Chitwood & Harley, and Stull, Stull & Brody as co-lead counsel. A mediation was held in January 2002 under the direction of a former federal district judge. Mr. Koehler and some other lead plaintiffs were present at negotiations but left after two days. The mediation continued and resulted in a $490 million settlement.

Hearings were then held to determine the fairness of the settlement. Mr. Koehler retained separate counsel and objected to the settlement. He felt the settlement was too low and was disproportionately distributed among the shareholder classes. He also felt the settlement was invalid because he had not been present when the settlement agreement was reached, because he allegedly had been misled by counsel and because counsel had allegedly made false representations to the court about his approval that violated the Private Securities Litigation Reform Act of 1995 (the “PLSRA”). Mr. Koehler also alleged other ethical violations by the attorneys, and submitted an expert affidavit from a legal ethics specialist regarding the alleged breaches. Id. at *1. "

Here is a NJ case about legal malpractice insurance coverage for successor attorneys.

"In this appeal, we decide whether a policy of insurance providing coverage for legal malpractice requires the insurer to provide indemnification to a former partner of a law firm for acts of malpractice allegedly committed subsequent to the dissolution of that firm. Under the facts presented, we conclude that the former partner was acting "solely in a professional capacity on behalf of such firm," as required by the policy of insurance and was entitled to a defense and indemnification. Accordingly, we affirm the trial court's grant of summary judgment in favor of defendant John J. Marquess"

Here in the SCOKY Blog we have a list of upcoming KY Supreme Court arguments, complete with briefs and records.  The case of Kaplan v. Puckett appears to be a successful prisoner v. attorney legal malpractice case.

Follow for results!

This "immediate release" letter from whistleblower sounds like an attempt by the client to shame defendants into a settlement.  We are often asked whether shame plays a role in legal malpractice.  Clients often believe that an attorney will settle rather than litigate for fear of having this sort of a press release hit the web.

We saw this on a search for legal malpractice.  How many others read this is unknown.  Do you think this will pressure the attorneys's insurance carrier to settle?

Loeb & Loeb has been using a retainer agreement that required arbitration.  This reported case is the second of two in which Loeb & Loeb has successfully stayed legal malpractice cases in favor of arbitration.  This case held that the Supreme Court Case is stayed whild arbitration goes  forward.  Other courts have held that arbitration of legal malpractice cases runs against public policy.

This story is beyond belief.  Plaintiff is convicted of a crime, and then the conviction is reversed.    However, no one, not his attorney, not the DA, and not the state ever let him out!  Result?  He stayed in jail for 17 years after reversal.

"Although the Michigan Court Appeals in 1989 overturned his 1987 conviction because inadmissible evidence was used against him, no one ever acted on the court's order. It just sat there while Heyerman sat in prison -- for an incredible 17 years. His original attorney did nothing to challenge his imprisonment.

The government was equally at fault. The Calhoun County prosecutor and circuit court failed to either re-try Heyerman or drop charges against him. Meanwhile, the Parole Board denied him release three times after he had served his minimum sentence.

Heyerman would still be in an Upper Peninsula prison if another inmate, a jailhouse lawyer, hadn't helped him write a writ to get a new trial. Two weeks ago, a Calhoun County judge finally dropped all the charges against the 54-year-old former janitor. "

Heyerman plans to sue his original attorney and to file a civil suit against the state for wrongful imprisonment. This mess is likely to cost taxpayers more than they paid to keep Heyerman locked up.

Here, Hinshaw reports a NJ attorney who lost legal malpractice coverage for failure to report.  Court found that it should have known, subjectively that notice to the insurer was due.  NY has similar cases, for example, Cass v. American Guarantee in which the law firm should have given notice.  As determined by Justice Tolub , any reasonable attorney would have known that a malpractice case was on the way, after the worker compensation case was dismised.

Here is a divorce legal malpractice legal fee case from the upper reaches of NJ society, complete with client meetings at the country club, promises to pay for the divorces of others, vindictive hiring of attorneys...you name it.

By way of background, on August 18, 1997, defendant retained plaintiff to represent him in a contentious divorce action already underway and involving substantial marital assets. At the time, defendant and his wife were separated and defendant was residing with Moran and her children, one of whom was the daughter of John Izmirlian, from whom Moran had already been divorced.

Defendant's own matrimonial dispute was scheduled for trial on May 19, 1998, less than nine months after plaintiff was retained. Rather than proceed to trial, defendant and his former wife elected to engage in settlement negotiations and after two days, on May 21, 1998, reached an agreement. A final judgment of divorce was entered the next day, May 22nd, after a hearing in which the terms of the property settlement agreement (PSA) were placed on the record and the parties testified they entered into it knowingly, freely and competently.

Defendant also appeals from an October 28, 2005 order of final judgment holding him liable for fees and costs incurred by plaintiff on behalf of Moran. The genesis of that matter was in late January-early February, 1999 when, during the course of his own post-divorce litigation, defendant arranged a meeting with plaintiff and Moran to discuss plaintiff's representation of Moran in a post-divorce action initiated by Moran's former husband Izmirlian. Earlier, defendant had conveyed to plaintiff his opinions that Izmirlian was dishonest, concealing his income from both the Internal Revenue Service and Moran, and that he should be made to pay all the child support for the daughter then living with defendant and Moran. By all accounts, that meeting was held at a local country club and thereafter, on February 5, 1999, plaintiff and Moran signed a retainer agreement.

According to plaintiff, the meeting lasted two hours during which they talked almost exclusively about Moran's legal situation. Defendant once again mentioned that Izmirlian was attempting to hide his finances and that he wanted to ensure Izmirlian paid his support obligations. Moran said she was unable to pay for plaintiff's services and plaintiff herself knew that Moran had no steady means of supporting herself, that Izmirlian had no money, and that Moran had previously discharged a fee obligation of approximately $15,000 in bankruptcy proceedings. Consequently, plaintiff raised the issue of payment, asserting that litigation would be expensive and that she could not proceed without payment. According to plaintiff, defendant assured her that he was "willing to throw some money at this, so that that little prick pays to support his kid." With that assurance, plaintiff entered into a retainer agreement, and commenced preliminary work on the case, including arranging a meeting between the parties, which turned out to be unproductive.

The following day, May 23rd, defendant, apparently concerned for his former wife, agreed to renegotiate the PSA, however, these negotiations eventually proved unavailing. As a result, defendant's former wife moved to set aside the PSA and a twenty-two day plenary hearing ensued in which she claimed she was under duress at the time. At the conclusion of the evidence, Judge Cass denied the application to set aside the PSA, finding it was fair and reasonable and not the product of duress or incompetence. "  Read the rest!

Anthony Lin reports in the NYLJ that Sidley Austin has avoided prosecution for tax shelter manipulation, even though one of its "expelled" attorneys is facing felony charges.  SA will pay $ 39 milliion in fines.

"Federal prosecutors have decided not to bring criminal charges against Chicago law firm Sidley Austin over its involvement with illegal tax shelters, though the law firm will pay a civil penalty of $39.4 million to the Internal Revenue Service.

In announcing the decision yesterday, U.S. Attorney Michael J. Garcia of the Southern District of New York distinguished the actions of the firm from that of former tax partner Raymond J. Ruble, who is already facing a criminal trial in Manhattan federal court.

Mr. Ruble, who was expelled from Sidley Austin in 2003, and several former employees of accounting firm KPMG are charged with creating and promoting tax shelters banned by the IRS, with Mr. Ruble also issuing hundreds of opinion letters meant to provide legal cover for the shelters. The IRS estimates 700 wealthy individuals and corporations relied on Sidley Austin opinions in purchasing illegal tax shelters.

In deciding not to prosecute the law firm, Mr. Garcia said his office took into account the fact that most of Mr. Ruble's activities took place when he was a partner at New York's Brown & Wood, with which the firm then known as Sidley & Austin merged in 2001. The former Sidley & Austin had never had a tax shelter practice and took steps at the time of the merger to rein in Mr. Ruble's practice. Mr. Garcia said Mr. Ruble continued his practice only by misleading his partners at the merged firm. "

Here is a very interesting case from the 2d Department.  It involves one of the best and most known medical malpractice practitioners, who has more multi-million dollar verdicts and settlements than most of us have even read about.  This case teaches three lessons.

The first is that an infant's compromise, a wrongful death compromise or other judicially decided award of legal fees virtually kills any legal malpractice claim.

The second is that it is probably always better to communicate with your clients over settlement demands in writing.  Here there was an offer of $ 1 million to settle, which was turned down, ending in a verdict of $ 350,000.  Client admitted, kind of, that she knew of offer, perhaps...but called it a "settlement value" rather than an offer.

Third lesson, well known to all, is don't ask a question without either knowing what answer will be given, or prepping the witness with an appropriate answer.  Here, plaintiff's attorney asked what would have happened if the $1 million had been offered, and the client waffled.

Result?  Legal malpractice dismissed.

What an International Cast!  "Southern District of New York Judge Lewis Kaplan dismissed civil racketeering charges seeking millions in damages against Faith Zaman and Thomas William Derbyshire by the younger brother of the Sultan of Brunei -- Duli Yang Teramat Mulia Paduka Seri Pengiran Digadong Sahibul Mal Pengiran Muda Haji Jefri Bolkiah, otherwise known as Prince Jefri -- and companies he controls. Alleged frauds committed by an English husband-and-wife legal team were not enough to support a prince's claim that his former advisers were engaged in a racketeering enterprise, a federal judge has ruled.

Prince Jefri had hired the barristers to serve as "principal legal advisors, strategists and confidantes" from May 2004 to November 2006.

But he claimed they abused his trust by selling a piece of the prince's property in a "sham transaction" to an entity they owned, used his money to buy property for one of their own companies, faked documents to overstate Zaman's compensation and hired her brother for an unnecessary job at New York's Palace Hotel, which was owned by one of Prince Jefri's companies.

Here a tax preparer was sued for not telling an "innocent spouse" about the danger of filing a joint return, when she could have filed an individual return and avoided a startling amount of liability.  After bankruptcy, wife sued and lost.

"Shortly before Ted’s death, Camille discovered that Ted had failed to pay the taxes. When attempting to sell the marital home, Camille learned that tax liens had been placed on the property to secure Ted’s business liability for federal withholding tax, interest and penalties. Camille ultimately fi led for bankruptcy and settled the federal and state tax liabilities. Camille then sued Crincoli and his fi rm for accounting malpractice, asserting that he had failed to advise her that, by fi ling a joint tax return, she could be exposed to personal liability for taxes, interest and penalties relating to her husband’s business – liabilities that she would not have borne had she fi led separately.

At trial, Camille’s accounting expert testifi ed that Crincoli had deviated from accepted accounting practices by failing to explain the risks of fi ling a joint return to both spouses. The expert conceded, however, that these “accepted practices” did not derive from standards set by the AICPA or the IRS, but rather were based upon his “personal” standards. In contrast, Crincoli’s expert testifi ed that Crincoli had acted properly and should not have been expected to investigate the accuracy of the information provided by the husband or to discover that the marital home was held in the wife’s name. The expert testifi ed further that it was not uncommon for one spouse to act as the agent for the other in communicating with a tax preparer.

After a four-day trial, the trial judge dismissed the complaint and entered judgment in the amount of $6,000 (the outstanding accounting fees) in favor of Crincoli. On appeal, the Appellate Division affi rmed the lower court’s ruling. The appeals court agreed with the trial court’s ruling that Camille’s expert was not credible, and that the standard of care set forth by Crincoli’s expert should govern. The appeals court also noted, that even if Crincoli had been negligent, that his negligence was not the proximate cause of Camille’s damages; she did not present any evidence that, had she been informed of the risks of fi ling jointly, she would have acted differently.

While both the trial and appeals courts ultimately sided with the tax preparer in Daunno, accountants and tax preparers should consider providing a standard written disclosure to their clients making clear that they are relying on the information supplied to them by the clients themselves and that they are undertaking no duty to conduct an independent investigation to confi rm the accuracy or completeness of that information. "

Dismissal under CPLR 3216, for a failure to provide discovery, or to follow a court order of discovery has been generally thought to preclude the use of CPLR 205.  CPLR 205 is a "saving statute"  which allows plaintiff to start a second action within 6 months of the dismissal of the first, so long as it was not for certain reasons.  Here, in this case:

"CPLR 205(a) provides that

"[i]f an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff, or, if the plaintiff dies, and the cause of action survives, his or her executor or administrator, may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period."
While dismissal of an action for failure to comply with discovery orders has been held to be a dismissal for neglect to prosecute the action' within the meaning of CPLR 205(a) (see Andrea v Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, P.C. [Habiterra Assoc.], 5 NY3d 514, 518), here, the plaintiffs' conduct did not rise to that level. "

There is a saying that bad cases make bad law.  We've always understood that proverb to mean that poorly argued or conceptualized cases affect the entire field of law.  Here is an example of the situation.  Pro-se defendant attorney in a legal malpractice case was served directly in hand by the attorney for plaintiff.  Why the attorney did not use a process server is beyond us.  Nevertheless, this appellate division case is now law, and must be digested.

"The advocate-witness disqualification rules contained in the Code of Professional Responsibility provide guidance, not binding authority, for courts in determining whether a party's [counsel], at its adversary's instance, should be disqualified during litigation" (S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437, 440). At bar, the hearing court providently exercised its discretion in permitting the plaintiffs' counsel to testify at a hearing that he personally delivered the summons and complaint, by hand, to the defendant Ronald J. Chisena. Where, as here, there is no necessity for the plaintiffs' counsel to be called as a witness at trial, no violation of the advocate-witness rule exists (see Code of Professional Responsibility DR 5-102[c][22 NYCRR 1200.21(c)]; S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., supra at 443). "

Attorney Malpractice is a litigation form with many highly sophisticated rules.  Attorneys make up the rules of attorney litigation.  Legal malpractice is subject to very stern analysis by judges.  Here is an article from Texas which sets forth rules on specificity there.

"In a further illustration of the need to avoid conclusory affidavits in summary judgment proceedings, a legal malpractice claim foundered when an affidavit concerning damages was found to be conclusory in United Genesis Corp. v. Brown, No. 04-06-00355-CV, 2007 WL 1345372 (Tex. App.—San Antonio May 9, 2007). "